Why is Temu So Cheap? 12 Factors Behind Its Low Prices [2024]

Why is Temu so cheap? If you’ve ever wondered how this e-commerce platform offers jaw-dropping deals, you’re not alone.

From shipping strategies to secret subsidies, Temu’s business model relies on direct shipping from Chinese vendors to consumers, which reduces costs by eliminating middlemen. This allows Temu to offer products at significantly lower prices, known as Temu’s low prices. But what’s the real catch?

In this article, I uncover 12 key reasons behind its ultra-low prices, giving you a peek into how Temu keeps your wallet happy—without giving away too much, of course. Curious? Let’s dive in.

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12 Reasons Why Is Temu So Cheap in 2024

1. Direct-to-Consumer Shipping

One major reason why is Temu so cheap lies in its shipping model. Unlike other online marketplaces like Amazon, where purchased items often pass through multiple warehouses, Temu’s business model simplifies this process.

Temu cheap products are shipped directly from manufacturers in China to your doorstep, avoiding costly middlemen and overhead costs such as storage and distribution in the U.S. Temu’s pricing is competitive due to direct sourcing from manufacturers in China and a low-profit margin business model.

Let’s say you’re buying electronics like a pair of wireless earbuds. On Temu, they arrive via standard shipping or even express shipping, depending on your location, but with fewer middle steps.

This allows Temu to offer cheap products with a faster, more efficient process compared to other shopping sites.

Also, the platform has a free shipping method as well, which makes their offerings even cheaper.

However, keep in mind that one frequent complaint about Temu’s products is the extended wait time for delivery.

So, even with express shipping options, standard shipping often takes longer than what shoppers are used to on other sites like Amazon.

For instance, you might order a trendy jacket in early December and not see it arrive until late January. So, this is why is everything so cheap in Temu.

2. Lower Seller Fees

Another reason Temu’s low prices stand out is that sellers on the platform pay significantly lower fees than on other online marketplaces like Amazon or eBay.

For example, sellers on Amazon can lose up to 60-70% of their revenue due to fees, which ultimately increases the prices you see as a shopper.

However, Temu works differently by charging minimal fees, allowing sellers to keep more of their profits and offer lower prices to attract customers.

So, a power tool might cost $50 on Amazon but only $39 on the Temu app, thanks to these reduced seller fees.

For consumers, this translates to more affordable purchases across various categories like clothing and home goods.

3. De Minimis Rule and Duty-Free Imports

Here’s a lesser-known but critical reason why Temu’s pricing is so competitive. Thanks to a U.S. law called the de minimis provision, shipments valued under $800 don’t incur import duties.

So, most products sold on Temu fall below this threshold, which helps the platform avoid the high tariffs that similar items on Amazon face.

For example, if you buy a similar item like a kitchen gadget on Amazon, it could cost 25-50% more due to tariffs.

On Temu, you’ll find cheap prices because those fees simply don’t apply. This unique approach is a key reason Temu’s products remain so affordable.

4. Chinese Government Subsidies

It’s worth noting that Temu’s business model benefits from government support. The Chinese government provides subsidies to platforms like Temu, incentivizing exports and boosting their competitiveness in the global e commerce landscape. And, this is another reason why is Temu so cheap.

In fact, Temu has been known to offer lightning deals where products like cheap goods (think budget-friendly clothing or gadgets) are sold at a fraction of their cost.

Without these subsidies, such low prices wouldn’t be sustainable.

This financial backing allows Temu to offer discounts and even operate at a loss to attract more customers and gain market share.

5. Economies of Scale

Wondering how are things on Temu so cheap?

Temu’s parent company, PDD Holdings, has a massive network of manufacturers across China, allowing it to leverage economies of scale.

By producing in bulk and negotiating for lower costs on raw materials, Temu’s products can be priced far below those on other sites. This model helps shoppers save money without sacrificing variety.

Imagine buying home decor in Temu. While other retailers might charge $30 for a lamp, Temu lists it for $10 because their bulk production model keeps costs down.

6. Bargain Prices and Shopper Psychology

Shoppers love a good deal, and Temu’s low prices tap directly into this mindset. Let’s admit it – how does not love the sound of % OFF!

We’re often thrilled when we find an item on sale or discover a cheap product. This sense of accomplishment draws people in.

On Temu, you’re not just shopping—you’re on a treasure hunt for the best bargains.

In my discussions with dropshippers, they often note how Temu’s business model cleverly capitalizes on this.

By offering lightning-fast discounts, even for basic products sold on other shopping sites, Temu keeps customers engaged.

As with AliExpress, I might spend an hour scrolling through Temu’s app, browsing everything from quirky kitchen gadgets to affordable clothing, without even planning a purchase.

It’s this endless variety and low cost that makes the app feel both fun and rewarding.

7. Aggressive Promotions and Discounts

Temu also uses aggressive marketing tactics, including heavy discounts, to draw in new users.

Frequent sales, free shipping, and first-time purchase bonuses make the Temu app incredibly appealing to shoppers.

For example, a first-time shopper might get $10 off their first purchase, plus free standard shipping, making even larger items like power tools incredibly affordable.

This strategy not only boosts initial sales but also ensures more customers return for future purchases.

8. Knockoff or Generic Products

One reason some Temu products are incredibly cheap is that they’re often generic or knockoff versions of branded items. Also, users question whether Is Temu low quality.

These cheap goods mimic high-end designs without the associated branding or licensing costs. For example, check out these Gucci bags. It looks like a top-brand model but costs from $10 to $20 on Temu.

However, this can sometimes lead to poor quality concerns, as the products might not meet the same standards as their branded counterparts.

While it might function adequately, don’t expect premium performance. Shoppers should weigh the trade-offs between quality and price.

9. The Trade-Off Between Quality and Cheap Prices

It’s not all smooth sailing, though. While Temu’s prices are appealing, Temu products often come with trade-offs. Many users highlight issues with poor quality and inconsistent product standards.

Hence, reviews are mixed, and while some shoppers are satisfied with their deals, others find themselves questioning if their purchases were worth it.

In my opinion, this trade-off is something every shopper should consider. You might buy a set of kitchen knives for a fraction of the cost found on other platforms but don’t expect premium performance.

In fact, I’ve come to a bunch of comments from shoppers that say that the product is low quality, but based on the price they paid it is worth spending money on.

10. Broad Product Range as Entertainment

Temu isn’t just a shopping site—it’s a form of entertainment. With its vast array of cheap products, from electronics to quirky home decor, many users see it as a fun way to pass the time.

In conversations with other users, this idea comes up often. The sheer variety of purchased items makes it easy to justify spending more time on the app.

It’s not just about buying what you need but also discovering things you didn’t know you wanted, all at incredibly low prices.

11. Ethical Concerns: Forced Labor and Low-Cost Manufacturing

Another layer to Temu’s low prices is tied to its manufacturers in China. Based on the Wired study, some products sold might involve forced labor or come from regions with questionable labor practices.

This raises the question of whether Temu is ethical. For instance, while you might snag a sweater for $10, the unseen cost could involve unfair labor conditions.

In the broader e commerce platform space, this isn’t unique to Temu. Other sites, including Shein and AliExpress, face similar scrutiny.

Some experts argue that selling products at extremely low prices raises red flags about the working conditions in the factories where these items are produced.

In response, Temu has been clear about its stance. The company insists that its factory-to-consumer model eliminates middlemen and reduces costs, allowing it to offer low prices without resorting to exploitative labor practices.

Hence, Temu also claims that its suppliers adhere to strict industry standards, supplying major retailers like Amazon, Walmart, and Target.

If ethical concerns are important to you, it’s worth noting these issues and researching them before making a purchase.

12. The Role of Reviews and Customer Satisfaction

With over 5.6M reviews, and a 4.5/5 star rating on major app platforms like Google Play, shows users satisfaction.

But, even among five-star reviews, users often mention concerns like long shipping times or poor quality. However, many shoppers still flock to Temu because the prices make it easier to overlook these drawbacks.

When I asked some frequent users about their overall satisfaction, they agreed that Temu offers great value for what you pay.

Still, it’s essential to set expectations. If you’re willing to compromise on quality or wait longer for your purchases, you’ll likely feel the cheap prices are justified. Otherwise, it’s best to stick to more reliable retailers.

Is Temu Legit?

Yes, Temu is a legitimate online marketplace operated by PDD Holdings, a global commerce group headquartered in Dublin, Ireland.

This parent company also owns Pinduoduo, one of China’s largest e-commerce platforms.

Temu has quickly made waves in the e-commerce world, especially in the U.S., by attracting over 167 million monthly active users worldwide.

Also, the platform is #5 in the eCommerce & Shopping > Marketplace category. Plus, it has over 678.5M total visits. And, with these results, the platform crossed over Amazon and AliExpress.👇

What Do Reddit Users Say?

Reddit users have mixed opinions about Temu. Some praise it for offering a wide range of products at unbeatable prices.

According to one user, “Temu is like a digital dollar store, great for small items like cleaning supplies or garden gloves.”

However, others caution that Temu’s product quality can be hit or miss, and it’s not a substitute for platforms like Amazon.

Another user remarked, “Temu is good for cheap, short-life products, but don’t expect the same quality as Amazon.” Some users have raised concerns about data privacy and Temu’s app permissions, likening it to potential spyware.

One commenter summed it up: “If you’re willing to gamble on quality for low prices, Temu’s worth a try—but be cautious.”

Trustpilot Reviews

Temu holds an average rating of 2.6/5 stars on Trustpilot. Hence, in my opinion, this is low.

Many customers share positive experiences, noting fast shipping and great deals.

However, the negative reviews often mention poor customer service, missing items, and unpredictable product quality.

Is Temu Safe to Buy From?

Yes, shopping in Temu is generally safe, thanks to their Temu Purchase Protection Program.

This program protects buyers in case of issues like receiving damaged, incorrect, or lost items.

The Temu Purchase Protection Program guarantees a full refund if you return your items within 90 days of purchase.

Here’s how to use it:

Step 1: Start the Return Process

Head to the “Your Orders” page and select the item you want to return. Click on “Return/Other Help” to initiate the return.

Step 2: Choose a Return Method

Pick your preferred return method and provide a reason for the return. You’ll then be able to print a return label and send the package via USPS or UPS.

Step 3: Receive Your Refund

If your return is eligible under the Purchase Protection Program, you’ll get a full refund once the item is received.

Temu also provides order tracking, allowing you to monitor your shipment and ensure a smooth delivery process.

How Does Temu Work?

Shopping on Temu is straightforward, offering a user-friendly experience similar to other e-commerce platforms.

Step 1 – Create an Account

Visit the Temu website and click on “Sign In/Register” in the upper-right corner. A registration window will pop up—just fill in your details and click “Continue”.

Step 2 – Browse for Products

Once logged in, you can explore a variety of categories or search for specific items using the search bar.

Step 3 – View Product Details

Click on a product to see its description, shipping times, and customer reviews. Thus, this helps you make an informed buying decision.

Step 4 – Add Items to Your Cart

Did you find something you like? Click “Add to Cart”. Your cart will appear in the top-right corner, where you can review your selections.

Step 5 – Checkout

When ready, click “Go to Cart” to review your items. Hence, you can adjust quantities as needed, then hit “Checkout”.

Step 6 – Enter Shipping Information

Provide your shipping address and click “Continue to Payment”.

Step 7 – Complete Payment

Select your payment method, fill in the required information, and click “Submit Order”.

Once your order is placed, you’ll receive a confirmation and tracking details. Now, all that’s left is to wait for your delivery!

What Products to Avoid Selling Or Buying On Temu?

If you’re planning to shop in Temu, it’s wise to avoid electronics and high-ticket items.

These products often come with quality issues, and misleading product descriptions are more common in these categories.

Instead, focus on small gadgets, accessories, and phone cases, which tend to offer better value for the price.

For instance, customers have had positive experiences with iPhone cases and wireless accessories, noting that they’re surprisingly durable and visually appealing.

However, when it comes to more complex items like earbuds or gaming devices, it’s best to look elsewhere for higher quality options.

Alternatives to Temu

AliExpress

If you’re searching for a platform with a vast product selection and competitive pricing, AliExpress is a fantastic alternative to Temu.

It connects you directly with manufacturers and distributors, primarily from China, which helps keep costs low. You’ll often find items here at prices that match or even beat Temu’s budget-friendly options.

One of the best parts about shopping on AliExpress is its Buyer Protection program. This feature ensures you get a refund if your order doesn’t match the description or arrives damaged, giving you peace of mind with every purchase.

However, shipping might test your patience. Standard shipping is typically free, but delivery can take anywhere from 15 to 45 days, depending on your location.

For those in a rush, AliExpress offers expedited shipping for an additional fee, which cuts delivery time down to about 7 to 15 days. It’s a great option if you want your items faster without compromising on savings.

Shein

For fashion lovers, Shein is a top choice. This platform specializes in trendy and affordable clothing for men, women, and children, along with stylish home decor items.

Compared to Temu, Shein’s focus on fashion makes it ideal if you’re looking to refresh your wardrobe without breaking the bank.

Also, Shein frequently runs sales and promotions, making its already low prices even more appealing. What’s more, their user-friendly mobile app offers a seamless shopping experience with personalized product recommendations, helping you find exactly what you’re looking for.

When it comes to shipping, Shein usually outpaces Temu. Thus, standard shipping takes about 7 to 15 days, but if you’re in a hurry, you can opt for express shipping to receive your order within 3 to 7 days.

Wish

If you’re all about finding the absolute lowest prices, Wish is the platform for you. It offers a wide array of products, including gadgets, fashion, and home essentials, often at jaw-droppingly low prices.

However, it’s important to note that product quality can vary, so always check the reviews before purchasing.

Wish gamifies the shopping experience with flash sales and daily deals, adding an element of excitement to every visit. You’ll often find items here at prices even lower than Temu, but you need to weigh the cost against potential risks in product quality.

Moreover, shipping times on Wish can be lengthy. Standard shipping often takes 15 to 45 days, similar to Temu.

For faster delivery, you can choose expedited shipping, although it’s not available for every product. Despite the longer wait, the ultra-low prices might make it worth it for budget-conscious shoppers.

Why Is Temu So Cheap FAQs

1. How long does Temu take to deliver?

Delivery usually takes 7-15 days, depending on your location. While Temu’s delivery times can be longer, they often offer tracking updates to keep you in the loop.

2. Is Temu safe to use credit cards?

Yes, Temu is generally safe for credit cards. They use secure payment gateways, but as always, monitor your statements for any unusual activity.

3. Where does Temu ship from?

Most of Temu’s products are shipped directly from China, which is why delivery can take longer but allows for competitive pricing.

4. Is it legal to resell items from Temu?

Yes, as long as you comply with local business laws. Many dropshippers source from Temu for low-cost products to resell.

5. Why does Temu sell cheap stuff?

Temu connects you directly with manufacturers and uses economies of scale, cutting out middlemen to keep prices low.

6. Are Shein and Temu the same?

No. However, they both offer affordable items and ship from China, Temu focuses more on a marketplace model, while Shein designs and sells its own products.

7. How does Temu make profit?

Temu profits by offering bulk deals to sellers and charging transaction fees. They also work on a high-volume, low-margin model.

8. What is the most expensive item on Temu?

Temu’s inventory changes frequently, but you’ll occasionally find higher-end gadgets or luxury items for a steal.

9. Is Temu losing money?

Temu may run at a loss for now, focusing on market growth rather than immediate profits. It’s a common strategy for startups.

Thus, according to a company insider, Temu is reportedly losing around $30 per order as it aggressively invests in gaining a foothold in the U.S. market.

10. Where does Temu get their products?

Temu sources from various manufacturers and suppliers across China, providing a diverse product range.

11. How is Temu different from Amazon?

Amazon focuses on fast delivery and premium services like Prime. Temu, on the other hand, emphasizes low prices and global suppliers.

12. How does Temu make money?

They charge transaction fees to sellers and work with manufacturers to offer competitive prices in exchange for bulk orders.

13. Why does Temu give free stuff?

Temu often gives promo credits or free items to encourage new users and boost app downloads. It’s a marketing tactic.

14. Is Temu bad to buy from?

No. While you might experience longer shipping times, Temu’s prices often make up for the wait. Just make sure to read reviews before buying!

Conclusion

In my opinion, understanding why Temu is cheap comes down to its direct shipping model, low seller fees, and smart use of subsidies.

While Temu cheap products offer incredible value, it’s essential to weigh the pros and cons. Quality may vary, so check reviews carefully to avoid surprises.

If you’re considering dropshipping on Temu, remember that longer shipping times could impact customer satisfaction. Ultimately, platforms like Temu—and other cheap websites like Temu—are great for budget-conscious shoppers, but keep an eye on product descriptions and delivery timelines.

Not all Temu products are low quality, but it’s smart to manage your expectations before diving in.